Sunday, December 19, 2010

Sleeping with one eye open

At this time of year, when the chilly winds blow cold and the end-of-year holidays conspire to shut the country down for a couple of festive weeks, I become reflective about why I am not richer than I am. I think of past follies, like selling Apple at $67 and being afraid to buy it back at $85, because Jobs was sick. But then I tell myself that I could have bought Microsoft in '86, or even as late as '95, and today I would be so stinking rich, that life itself would lose its allure.

The real folly is in fretting about the past. The only thing that counts is what I'm betting on now. Contrary to all intelligent opinion, I have now put two-thirds of my assets into five stocks, with the rest in cash. The stocks are Google, Conoco, Citigroup, Exxon Mobile, and ATP Oil and Gas. Cramer would say I'm overweight oil, but I don't care. I feel very comfortable because I know and understand these companies and their prospects. I believe that having enough confidence in a company to own it for a long time is the most critical element of investing success. I am so confident of these five stocks that I have acquired substantial positions in each of them.

I think that this is a time to be in the market. I am trying to resist the temptation to trade. The traders I watch are all clucking about the current level of bullish chatter they're hearing and, contrariwise, they are all still waiting for that slow train that they are sure is coming, which is the apocalypse promised by Roubini, Schiff and Fred Hickey. But the bullishness that the traders see is just headline frothiness. What they don't see is the deep, persistent and resistant level of bearishness underneath, which is them. It's this mother-lode of bearishness that supports my bullishness.